Young producer’s view on the milk price
We have done this to ourselves. No other industry would let this happen to themselves. The oversupply we have created has led to a milk price that virtually no farmer can even come close to breaking even on. As our pride and yearn to be independent drives us, we choose to not band together and control our surplus. The oil industry, computer technology and many others have chosen to work together to make their supply equal their demand. Competitors choose to work together so that supply equals demand so that they can all get a fair and reasonable and PROFITABLE price for the product that they make. We have not done this.
Demand will never again be the same. Two of the most populous countries – China and India – are increasing their domestic milk production by close to 10% per year. Let alone the fact that many other countries are doing the same, becoming self-sufficient in their dairy production so they can cut out the costs of importing it. This leaves us with fewer places to put our milk and thus an oversupply is created. We cannot blame the co-ops for not giving us a better price for our milk. They have no incentive, reason, or need to give us a better price when the demand that they have for our milk is far less then the supply that we give to them. They are simply weeding out the men from the boys, but the men are absorbing the boys and the dairy industry is becoming consolidated.
What about creating some sort of supply management program? The country would be divided into 6 regions and each region would have 2 representatives representing the dairy farms from that region. The representatives would meet and form supply management actions. Dairy farmers would sign legally binding documents vowing to carry out any actions required by these ideas with the incentive that they would be guaranteed that it would be of their best interest long term. For example, the entire country of dairies could cull 5-10% of their herd. Cull 5-10% of their bred heifers. It would be a continuous control management system. This, in turn, would create jobs as well. Surveillance and disciplinarian personnel, more representatives, etc… And milk co-ops would never support such a thing because it would not allow them to control the milk price. We would.
We slit our own throats in this industry. Because we are so independent and competitive, we search and use every advantage we can go after to advance ourselves. Long-term, these actions will have detrimental effects to our livelihoods. Sexed semen is a great example of this. By 2010, there will be 300,000 more heifers on the market. This is, and already has made the cost of replacements right next to beef price. BST as well has kept more milk on the market for years. These tools are great advancements in technology and management, but should be used on a limiting basis there again based on what supply is needed for our demand. Where demand for milk and milk products is shrinking, so shouldn’t our supply. We are all together in this industry and need to learn to work together as well.
How have we allowed ourselves to get to such a point in our industry? We allow the people that buy our milk to control what they pay us for it. We allow them to pay us what they want for OUR product. We sell our product wholesale yet buy our supplies retail. This is backwards and it is high time that we create our own solution rather than allowing the government to come up with a temporary solution with just enough carrot in front of our face to keep us settled. However, if we create this ourselves, where is the money going to come from? I don’t know.
Discouraged,
Young Dairy Farmer in VT
